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Yue v. MSC Software Corporation

United States District Court, N.D. California

July 15, 2016

DONGXIAO YUE, Plaintiff,
v.
MSC SOFTWARE CORPORATION, Defendant.

          ORDER DENYING LEAVE TO FILE FIRST AMENDED COMPLAINT, DENYING MOTION TO LIFT RESTRICTION ON DISCOVERY PERIOD, AND VACATING HEARING Re: Dkt. No. 37

          PHYLLIS J. HAMILTON United States District Judge

         Before the court is pro se plaintiff’s Dongxiao Yue’s motion for leave to file a first amended complaint and to lift the time restriction on the discovery period. Dkt. 37. The matter is fully briefed and suitable for decision without oral argument. Accordingly, the hearing set for July 20, 2016 is VACATED. Having read the parties’ papers and carefully considered their arguments and the relevant legal authority, and good cause appearing, the court hereby rules as follows.

         BACKGROUND

         This is a copyright case involving computer software. Beginning in 1994, Dr. Yue developed a software program called “PowerRPC, ” which allows computers to remotely access other computers. Compl. ¶ 11 (Dkt. 1). In 1996, Yue founded an LLC, Netbula, to market PowerRPC. Compl. ¶ 12. Yue is the founder and sole owner of Netbula LLC. In 2005 and 2006, Netbula registered two copyrights in PowerRPC. Compl. ¶ 4. In 2007, Yue registered a copyright in the “pre-1996” version of PowerRPC, and Netbula assigned its copyrights in PowerRPC to Yue. Compl. ¶ 4.

         Defendant MSC Software Corporation (“MSC”) developed and sells the software programs PATRAN and Supermodel. Compl. ¶¶ 24-25. Yue alleges that these programs incorporate and use copyrighted elements of the PowerRPC software. Compl. ¶¶ 25-30. Based on that incorporation, plaintiff asserts five copyright claims against defendant. Compl. ¶¶ 38-68. Plaintiff also asserts a single claim of trademark infringement against defendant. Compl. ¶¶ 69-77.

         On February 26, 2016, MSC’s motion to dismiss Yue’s trademark claim came on for hearing. The court denied the motion. Dkt. 24. At a subsequent case management conference, the court set a pretrial schedule and limited the discovery period to the past five years. Dkt. 30.

         Yue now brings a motion for leave to file a first amended complaint pursuant to Federal Rule of Civil Procedure 15(a)(2), and to lift the limitation on the discovery period. Mot. at 1 (Dkt. 37). Yue’s proposed amended complaint seeks to assert two new claims (the “fraud claims”), alleging intentional fraud and unfair competition in violation of California law. See Proposed First Amended Complaint (“PFAC”) ¶¶ 84-97 (Dkt. 37-1).

         Yue’s new fraud claims arise out of a 2001 contract between MSC and Netbula (the “Agreement”). In June 2001, MSC signed a software license agreement with Netbula, which included five developer licenses and the right to distribute 1000 copies of software containing the PowerRPC “runtime files.” PFAC ¶ 25. In August 2005, MSC terminated the Agreement. PFAC ¶ 27. Around that time, “Plaintiff requested MSC Software to provide an accurate count of the licenses” actually used under the Agreement; MSC gave this number as 159. PFAC ¶ 28. Yue alleges that when MSC terminated the Agreement, it “represented to Plaintiff that it had stopped using PowerRPC.” PFAC ¶ 85. Contrary to MSC’s representation, Yue alleges that “in fact” PATRAN and SuperModel were developed with and used PowerRPC and were infringing on “a massive scale since 2004.” PFAC ¶ 86. On the basis of these new fraud claims, Yue seeks to extend the discovery period “to June 2001 or earlier.” Mot. at 1.

         MSC opposes leave to amend the complaint as futile, because Yue lacks standing to assert the fraud claims. Opp’n at 1 (Dkt. 38). MSC contends that because the fraud and unfair competition claims arise from an agreement between MSC and Netbula, these causes of action belong to Netbula, and not Yue personally. Opp’n at 2. MSC argues that Yue attempts to blur the legal distinction between Yue and his company in order to circumvent the rule against pro se representation of corporate entities, noting Yue’s previous attempts, in other cases in this district, “to litigate, pro se, claims that properly belong to” Netbula. Opp’n at 1.

         DISCUSSION

         A. Legal Standards

         1. Federal Rule of Civil Procedure 15(a)(2)

         Under Federal Rule of Civil Procedure 15, a party may amend its pleading as matter of course within 21 days. Fed.R.Civ.P. 15(a)(1). Thereafter, amendment requires either the opposing party’s written consent or the court’s leave. Fed.R.Civ.P. 15(a)(2). However, courts should “freely give leave when justice so requires.” Id. In deciding whether to grant a motion for leave to amend, the court considers bad faith, undue delay, prejudice to the opposing party, futility of amendment, and whether the moving party has previously amended the pleading. In re W. States Wholesale Natural Gas Antitrust Litig., 715 F.3d 716, 738 (9th Cir. 2013). Of these factors, the consideration of prejudice to the opposing party carries the greatest weight. Eminence Capital, LLC ...


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